Singapore clamps down on Bitcoin exchanges with new regulations

Singapore plans to regulate local Bitcoin exchanges to stop the virtual currency from being used in money laundering and terrorist financing schemes, authorities said.

By
Michael Kan
| Mar 14, 2014

| IDG News Service

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Singapore plans to regulate local Bitcoin exchanges to stop the virtual currency from being used in money laundering and terrorist financing schemes, authorities said.

The Monetary Authority of Singapore (MAS) is bringing greater scrutiny to Bitcoin because of its "anonymous nature" in virtual currency transactions, it said in an online post on Thursday. Transactions with the digital currency can be done without submitting a user's personal information.

As part of the new regulations, Bitcoin exchanges and vending machines will have to verify the identities of their customers, and report suspicious transactions to local authorities.

MAS doesn't intend to regulate all bitcoin transactions, and said it was taking a "targeted" approach. Nor will it offer bitcoin investors the same safeguards other traders in real currencies receive.

Instead, Singapore authorities are warning consumers about the rapid price fluctuations of virtual currencies. In the last year, Bitcoin prices have been volatile, reaching as high as US$1,126 in November, only to fall by several hundred dollars in the following weeks. Currently, bitcoins trade for $644, according to Coinbase, a U.S. based company that's building services around the digital currency.

Singapore's MAS, however, said that it could step up Bitcoin regulations if needed. The group plans to monitor the development of virtual currencies closely. MAS previously published a consumer alert, warning the public on the risks of trading in bitcoins.

The regulatory steps are just the latest efforts by governments to control bitcoin trading. Singapore's neighbor China has banned the nation's banks from trading in the currency, and implemented similar anti-money laundering measures for local Bitcoin exchanges.

In the U.S., the heads of one exchange called BitInstant were recently arrested for allegedly laundering money with the digital currency. The CEO of BitInstant and the site's compliance officer allegedly schemed to sell over $1 million in bitcoins to facilitate illegal drug sales.